California Supreme Court Holds that Song-Beverly Act Does Not Apply to Online Downloadable Purchases

On February 4, 2013, the California Supreme Court held in Apple Inc. v. Superior Court (Krescent) that the Song-Beverly Credit Card Act’s prohibition against recording customers’ personal identification information as a condition of credit card purchases does not apply to online purchases in which the product is downloaded. This decision will provide significant relief to online retailers, who otherwise could have been exposed to up to $1,000 in statutory penalties each time a customer was required to enter an address or telephone number in order to complete a downloadable online purchase.

For now, retailers can rest assured that online transactions involving downloadable products do not fall within the scope of the Credit Card Act. However, the Court invited the Legislature “to revisit the issue of consumer privacy and fraud prevention in online credit card transactions,” while other questions, such as the application of the Credit Card Act to online transactions not involving downloadable products, still remain open.

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